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Falling dollar worries Qantas as surcharges show

August 1, 2013 Aviation, Headline News No Comments Email Email

egtmedia59Qantas is raising fuel surcharges on international routes and lifting domestic fares.  

The carrier blamed higher fuel costs and a plunging Australian dollar. Fares across the domestic network, including QantasLink, will rise between 2% and 3%, depending on route and class.

On international routes, the increase on a return flight to UK/Europe is AUD 50 in economy, AUD 70 in premium economy and AUD 130 in first or business class. Centara

Economy passengers face an average increase of about AUD 40 on a return  international flight on tickets issued in Australia from 14 August 2013.

While AUD 40 (AUD 20 one-way) doesn’t sound much, the fuel surcharges applied by Qantas are now quite considerable. They are, from 14 August 2013 on a return economy class flight: AUD 680 to the US mainland; AUD 510 to UK/Europe; AUD 280 to the Middle East; AUD 310 to Asia; AUD 370 to Hawaii; AUD 570 to South America and AUD 520 to South Africa.

The cost of Singapore jet fuel in Australian dollars has risen “significantly” since Qantas last raised fuel surcharges in April 2012, the airline said.

Another significant concern for Qantas is that the Australian dollar has fallen against a raft of currencies. That trend is deflating the outbound travel boom from Australia which has buoyed the leisure travel market. The Aussie unit had reached dizzy heights against the US dollar, the euro and many other popular currencies, including many in Asia.

“While we use a range of tools to mitigate the impact of fuel costs – including fuel surcharges, price increases and hedging – the Qantas Group is still under-recovering the cost of past fuel price increases,” Qantas stated.

A month ago, Qantas moved to align its fees with alliance partner Emirates, with Qantas lowering fees and Emirates raising them.

Jetstar is also reviewing its fees but hasn’t yet decided whether to raise them.

In any case, the gains that airlines stand to make from fuel surcharges are often undermined by market price fluctuations as they duel to attract customers, offering various sales and limited duration specials.

Written by : Peter Needham

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